Companies like to segment their potential customers according to geography, demographics, behavioristic and psychographic in order to allows the firm to better satisfy the needs of their potential customers. However, customer behavior also effected by the environment and the technology, so nowadays it become a increasingly important consideration that marketers need to analyze the behavior of each generation and its contrasts in order to better meet the unique needs of different generations. So there must have some similarities and differences exist in each stage of customer from different generation making luxury goods purchase.
Age is an important consideration that affects consumer behavior of luxury goods, different generations has different needs to luxury products, they buy them from different dimensions of luxury value. There are some perceptions of different luxury values such as functional value, financial value, social value and individual value, which can be different for people who belong to different age groups. (Srinivasan, etc. 2014)
Compare to generation X, the luxury in millennial customers’ mind is more about experience rather than financial value. According to Sun (2017) ‘Millennials prefer experience over the product’, their priority is to acquire new experience rather than owning more material statements of success and luxury, the luxury goods help them to stand out, to define their personality, life and taste.
According to Tesseras (2015) suggests: in UK, only 12% customers viewing luxury purchases as a status symbol. In terms of millennials, there are almost two third (62%) of them buy luxury goods for gain some form of social acknowledgment. In their point of view, the traditional luxury goods as ‘expensive indulgences inconsistent with their desire to live in a modest and sustainable way.’ (Brown, 2015) But it does not means they are not interested in luxury goods, their focus are not only limited on the physical aspect of product, they thought more of what kind of unique personality could that product bring to them, and what kind value the brand could give them rather than just product itself, the luxury goods they buy must have a functional or performance-oriented reason for its higher cost.
Once the customer needs has been recognized, they would seek information about possible ways that could satisfy their needs, different generation rely on different way to generate information.
Millenials have grown up with the Internet and smart phones in an always-on digital world, they are changing the speed of information exchange in the marketplace, more than 85% percent of Millennials have created profile on social media website. (NCF, 2012) they prefer active search information online rather than passive accept information from traditional way of marketing such as TV advertisement, newspaper and magazine. According to Schawbel (2015) suggests: one third of the millennials rely on social media before make a purchase, compared to fewer than 3% of TV news, magazines etc. they like to use mobile devices to read user reviews and explore information from social websites and also share their views on it. The luxury institute also suggests that 60% of Millennials read user-generated product reviews when they buy luxury products, (Sun, 2015, p.16) For older generations, the traditional media still play a equally important role to social medias. In addition, millennial consumer also follow peer affirmation, they are highly rely on the information and accommodations from their friends and peers rather than from experts, there are 70% of Millenial customer are more happy with their friends’ agree when they decide buy a product, compared with just 48% of non-millennials. (SUN, 2015)
On the other hand, compare to Millennials rely on common from friends and other peers when buying luxury goods, the generation X consumers are considered as more independent, they will not buy a luxury goods unless they know enough about the product or brand.
In addition, compare to generation Y highly rely on the information from social websites, the Generation X consumer shows a equal respond to digital medias and traditional advertising, as they are born on the introduction of computer and internet, they saw the development of these technologies, they are pretty tech-savvy as well, but these technologies introduced when they were young, and was not been popularized, so they also considered to rely on traditional advertising. (Williams, n.d.)
As millennairs is the generation who are highly affected by the mobile devices and Internet, so they are the most tech-savvy and informed consumers and more likely to shop online than generation X customers, especially discovered new brands, products on their smartphone. But it does not means the retail store will disappear, there are more than half of Millennair costumers when buy when luxury goods prefer learn about the product and try it in store but buy online. It said by Milton Pedraza, the CEO of Luxury Institution: ‘the in-store experience is till sticky, the retail store is not going away.’(Johnson, 2012)
On the other hand, there is increasing trend in Gen X consumers to shop online, but it is still lesser than Millenniars, they also like seamless omnichannel purchase experience, they like click and collect or reserve to store. (Tapbuy, 2016) compare to Millenniar accounts for 31% of luxury goods online sales, Generation X just take 21%. (AdAge Insights, 2012)
After millennials buy the luxury goods, they are turn to social websites to reinforce their buying decision, there is 22% of them would like to sharing it for validation. (Hearst, 2016) Further more, they care more about shopping experience, once they buy this luxury product from this brand, they are more likely to choose another alternative for next purchase in order to gain different experiences. The Gen Xers pay more attention on the customer service, once they satisfy to the whole buying process, the brand loyalty established, they would like to stick on this experience, still choose this brand for next purchase.
To conclude, Millenniars and generation Xers are the generation which most effected by the Internet and modern technology, so from some aspect they have a similar customer behavior, through the comparison, the significant differences can be seen from 3 aspects, which are their attitude to the luxury goods, the brand loyalties, and the impact from sociocultural elements. Millenniars buying luxury goods because they want to stand out from others and showing their personality; and they are influenced by peers and friends. While the perception of luxury products in generation Xers are more likely to be a social status; the influence from the social class play a key role when they by luxury goods, and Generation Xers are also more loyal to the luxury brand than Millenniars.